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The “Most Overpriced, Oversupplied, Over-owned Market in History”
Michael Pento, president of Pento Portfolio Strategies, believes the U.S. Treasury market is a massive bubble destined to pop with devastating consequences. Unlike most, Pento is willing to put a timeline on when he believes the bond bubble will burst, which is the theme of his not-so subtly titled new book: The Coming Bond Market Collapse. Sometime in 2015-16, foreigners creditors will conclude with a [...] by Phoenix Capital Research
Over the last week I’ve introduced the concept of collateral: the basis for the entire financial system. We’ve also addressed why any EU sovereign default would bring about an epic meltdown as EU bonds, particularly those of Spain and Italy are the collateral underlying hundreds of trillions of Euros worth of trades for EU banks.
Again, the most important issue for the financial system is the search for high [...] SGTreport has released an excellent interview with Ron Hera from Hera Research discussing the FOUR ways the Dollar could die. Ron believes the most frightening and imminent possibility leading to the death of the Dollar is not lost confidence in the Dollar or in the Treasury market, but rather in the financial markets as a whole — as Ron puts it, it is the unpunished and rampant financial crimes that will likely lead [...] Starting next year, new rules will force banks, hedge funds, and other traders to back up more of their bets in the $648 trillion derivatives market by posting collateral. While the rules are designed to prevent another financial meltdown, a shortage of Treasury bonds and other top-rated debt to use as collateral may undermine the effort to make the system safer. Derivatives allow buyers to bet on the direction of currencies, interest [...] After the Fed failed to act today, all eyes are on the European Central Bank which will release its monetary policy decision tomorrow.
Markets will be watching to see if ECB president Mario Draghi will stand by his promise to “do whatever it takes to preserve the euro”. Some expect that Draghi could announce, that he wants sovereign bond yields to converge within 300 – 400 basis points of the benchmark yields on German bunds. In a new report, Societe [...] Investment fund manager and author of the ‘Gloom, Boom & Doom Report’ recommends physical over mining stocks and says another move to downside of gold is possible, but worldwide printing of money assures long-term support.
Swiss-born and educated Marc Faber’s distinct voice is a common sound on CNBC and Bloomberg TV when it comes to big-picture forecasting in investments. The contrarian views of his “Gloom, Boom & Doom Report” often garner [...] In what may be the gray swan that all hell is about to break loose, we read that one of the world’s largest hedge funds, British Man Group with $58 billion in AUM, is about to launch High Frequency Trading – the same high volume churning, sub-pennying, liquidity extracting, stub quoting and quote stuffing parasitic algorithms that frequently crash the equity, and as of recently the FX and commodity markets, into [...] James Bianco plays straight-man to Charles Biderman in this extended (and admittedly audio-challenged) discussion of the reality behind money printing, inflation, and the US Treasury market. Following our discussion of the deficit earlier, it seemed appropriate to listen to this back-and-forth as Bianco addresses who is really buying US Treasuries, how ‘money’ is created by the Fed for the banks, and where inflation is leaking into the system. “The day the Fed [...] It’s That Time of The Month, Employment Data Leads To Investment Mood Syndrome Courtesy of Lee Adler of the Wall Street Examiner Every month the gummit’s Bureau of Liar Statistics (BLS) dutifully reports reams and reams of data on the employment situation in the US. Some of it is actually useful. The rest is reported by the mainstream financial news media. The BLS reports both seasonally adjusted (SA) data and not seasonally adjusted (NSA) [...] In a recent letter, Scott Minerd of Guggenheim Partners argues that thanks to the world’s central banks, the economy — at least in the US — has entered a self-sustaining recovery, and that domestic investments will continue to do well. And like many other top tier investors (too many to count, really) he loathes Treasuries. In the U.S. fixed income markets, the credit trade has worked very well. As concerns about the [...] He said that the Fed has destroyed the incentlive to save by lowering and negating interest rates and thus pumping up bond prices. This really struck a chord with Sullivan, the look on his face was priceless with a most indignant face, he asked Dr. Paul … “so you are saying that Treasury bonds are in a bubble”? “ABSOLUTELY” was Mr. Paul’s reply. Interest rates are at all time lows which means that bond [...] Jim Willie CB Central banks are the current sovereign debt market. It is a vacated market; they are the majority bidders via debt monetization. Monetary inflation has become the new normal. In perverse fashion, the financial markets celebrate the monetized purchases, even calling for higher volume. In the process, bond and stock market integrity has been destroyed. Foreign creditors are exiting the US Treasury market. Large European banks [...] Courtesy of Lee Adler of the Wall Street Examiner The following is an extended excerpt from the Wall Street Examiner Professional Edition weekly Treasury update. Last week was a light auction week with a net of just $3 billion in new supply settling on Thursday. That took the pressure off stock and bond prices. The fact that neither market could mount a sustained rally suggests that markets are weak. Stocks and bonds gyrated [...] Stock World Weekly: Europhoria Excerpt from Europhoria, the week ahead section: The markets enjoyed this week’s eurozone announcement, with its expansion of the EFSF, the 50% “haircut” for Greek bondholders, and the recapitalization of European banks. But the Europhoria was not universal, and many remain skeptical. For a well-done glimpse into the inner-workings of the eurozone’s latest plan, watch this Xtranormal cartoon. Zero Hedge’s take: “While it is not the [...] Brian Sack, the Federal Reserve Bank of New York’s markets group chief, said the central bank’s program of reinvesting proceeds from maturing housing debt into mortgage-backed securities isn’t disrupting markets. “The purchases have gone smoothly and market liquidity seems to be quite good,” Sack said today in the text of remarks given at the New York Fed’s annual meeting with primary dealers. The policy-setting Federal Open Market Committee last month said it would [...] kingworldnews.com With stocks moving higher along with gold and silver, today Michael Pento, of Pento Portfolio Strategies, explains for King World News readers globally why the Fed has created a ticking time bomb and what the implications are for the gold market, “Bernanke’s ‘Operation Twist’ has succeeded in sending yields on longer duration maturities to record lows. But what is now being lauded as a success [...] http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011987/ch… China to ‘liquidate’ US Treasuries, not dollars A key rate setter-for China’s central bank let slip – or was it a slip? – that Beijing aims to run down its portfolio of US debt as soon as safely possible. “The incremental parts of our of our foreign reserve holdings should be invested in physical assets,” said Li Daokui at the World Economic Forum in the very rainy city [...] By now only the cream of the naive, Kool-Aid intoxicated crop believes that the US is not in either a deep recession, or, realistically, depression. For anyone who may still be on the fence, here is David Rosenberg’s latest letter which will seal any doubts for good. It will also make it clear what the fair value of the stock market is assuming QE3 fails, [...] As gold sells-off from a tremendous 29% run from the July 1 low of $1,478, Marc Faber, the editor and publisher of the Gloom Boom Doom Report, told Bloomberg’s Carol Massar and Matt Miller on Wednesday his “favorite investment” still remains gold. The self-described “greatest bear on earth” reiterated his long-standing view that the Fed will print the U.S. dollar into oblivion in response to sickly economic data that continues to stream [...] by ZH In a Bloomberg TV interview following today’s quixotic “QE3/non-QE3 announcement, which is Operation Twist 2, but not LSAP, and ushers in economic recession, even as it sends risk assets soaring, and somehow pushes the 2 Year a whopping 20 bps tighter so buy,buy, buy” and is really very much ado about nothing, the always outspoken Marc Faber had some very choice words about life, [...] Aug. 9 (Bloomberg) — Marc Faber, publisher of the Gloom, Boom & Doom report, discusses today’s Federal Reserve policy decision and the prospects for another asset-purchase program by the Fed. Faber, talking with Carol Massar and Matt Miller on Bloomberg Television’s “Street Smart,” also talks about the Treasury market and investing in gold. (Source: Bloomberg) Original source Standard and Poor’s historic downgrade of U.S. debt on Friday won’t have much impact on the Treasury market, instead most of the impact will be felt by the equity markets, a number of experts told CNBC. Asian equities were all trading down on Monday, with markets seeing losses from 2 percent to as much as 7 percent for the KOSPI [.KS11 1869.45 -74.30 (-3.82%) ] by [...] http://www.cnbc.com/id/44000901 Debt Debate Distracted From, Maybe Worsened, Real Threat: Recession If the debt crisis was such a crisis, someone forgot to tell buyers of U.S. debt. In the last month, as debt threat hysteria reached a peak, the so-called yield curve collapsed sending prices for the supposedly tainted securities surging and yields lower. The 2-year [...] U.S. Debt Crisis Is Contrived, James Grant Says Debt crisis is contrived William D. Cohan, whose House of Cards is required reading about the crisis, sums up the disquiet in global markets: Here are the facts: The yield on Greek sovereign debt is now at record highs for the euro era. Last week’s state-managed bond auction in Italy almost failed. And, while few seem to have noticed, the overnight repurchase market — for short-term, secured, corporate debt obligations — [...] From Toni Pallotta Of Macro Story The US Economy Is Extremely Vulnerable To Recession in 2011 “Everything should be made as simple as possible…” – Albert Einstein You don’t need a degree in macro economics to understand an economy. Just because an economy is complex, the analysis need not be. I’ve been studying the change in GDP from Q4 2010 to Q1 2011 to get a sense of where [...] The Federal Reserve’s QE II asset purchase program is ending, so the Federal Reserve says, at the end of June. As a result, a very large bid is about to exit the U.S. Treasury market, with some even warning of a spike in interest rates on the U.S. government’s notes and bonds. Well, we here at THE CONTRARIAN TAKE thought we would crunch the numbers, to see [...] by Garrett Baldwin, Executive Editor, Investment U “Jim Rogers?” my friend Paul asked. “As in… the Jim Rogers? What exactly do you do again?” After I explained my new role at Investment U, I scribbled a few questions on the back of a napkin for an upcoming interview with legendary investor Jim Rogers. It’s the first of many interviews that Investment [...] |
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Of Belgium, Bonds, and Bullion
Fear is quite obviously rearing its ugly head once again tonight and Belgium’s ever-ready-for-an-understatement finance minister Reynders told La Tribune that the euro area may need as much as two years to overcome the sovereign debt crisis. We think it will all be over one way or another by then. As the US Treasury market opens for business tonight, yields are reflecting the fearful action seen in [...]